The excellent Planet Money blog has a fascinating post about why people aren't saving, including a screenshot of some of ING's CD rates.
According to Gordon Wilson:
People should save. But there needs to be more of an incentive to do it. These saving rates don't even cover the cost of inflation.
One of the unfortunate side effects of having the fed rate at such a low level [0 to .25 percent] is that people who want to save are effectively punished for doing so. A 5-year CD at 1.75 percent?! That is outrageous.
Wilson is right. 1.75% for a 5-year CD, even with the current low interest rates, is low. That's not to say that you can't find better rates. Banks looking to attract new business will host more attractive cd rates.
Friday, April 17, 2009
Why People Aren't Saving
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2 comments:
Interesting to delve into the reason people save. I have a small survey question:
Is saving driven by:
1) interest rates
2) economic confidence
3) to satisfy future objective, eg car or home purchase
Despite of the pathetic deposit rates people are saving some of their money and more so these days. According to the Bureau of Economic analysis the U.S savings rate is now over 3.0 percent, the highest rate since the third quarter of 2001.
Brian McKay
MonitorBankRates.com
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